Correlation Between Energisa and CSHG Recebiveis

Can any of the company-specific risk be diversified away by investing in both Energisa and CSHG Recebiveis at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Energisa and CSHG Recebiveis into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Energisa SA and CSHG Recebiveis Imobiliarios, you can compare the effects of market volatilities on Energisa and CSHG Recebiveis and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Energisa with a short position of CSHG Recebiveis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and CSHG Recebiveis.

Diversification Opportunities for Energisa and CSHG Recebiveis

0.19

Correlation Coefficient

Energisa  CSHG Recebiveis

Average diversification

The 3 months correlation between Energisa and CSHG is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and CSHG Recebiveis Imobiliarios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSHG Recebiveis Imob and Energisa is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Energisa SA are associated (or correlated) with CSHG Recebiveis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSHG Recebiveis Imob has no effect on the direction of Energisa i.e., Energisa and CSHG Recebiveis go up and down completely randomly.

Pair Corralation between Energisa and CSHG Recebiveis

Assuming the 90 days trading horizon Energisa SA is expected to generate 1.78 times more return on investment than CSHG Recebiveis. However, Energisa is 1.78 times more volatile than CSHG Recebiveis Imobiliarios. It trades about 0.11 of its potential returns per unit of risk. CSHG Recebiveis Imobiliarios is currently generating about 0.07 per unit of risk. If you would invest  3,719  in Energisa SA on December 24, 2024 and sell it today you would earn a total of  446.00  from holding Energisa SA or generate 11.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Energisa SA  vs.  CSHG Recebiveis Imobiliarios

Energisa SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energisa SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Energisa sustained solid returns over the last few months and may actually be approaching a breakup point.

CSHG Recebiveis Imob

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CSHG Recebiveis Imobiliarios are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong fundamental indicators, CSHG Recebiveis is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Energisa and CSHG Recebiveis

The main advantage of trading using opposite Energisa and CSHG Recebiveis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, CSHG Recebiveis can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CSHG Recebiveis will offset losses from the drop in CSHG Recebiveis' long position.

The idea behind Energisa SA and CSHG Recebiveis Imobiliarios pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.